Starting A Portfolio

The "investing" environment has significantly changed over the last few years; it is no longer a world for the bourgeoisies alone — everyone has begun to invest. The heydays of investment minimums no longer exist, as people are looking to finance their long-term goals with mutual funds and stocks. And it only takes as little as $50 to start an investment plan.

why is it so easy?

The complexity and power of the Internet world has opened doors, allowing potential investors to find out any type of information with the click of a mouse. Investment jargon has been brought down to layman terms so that investors can easily understand and build a portfolio that conforms to their needs.

Online brokerages are also making it easier for people to develop an investment portfolio. Although not the ideal investment technique for novice investors, these online services provide knowledgeable investors with many sources of information.

where to start

In years past, investors were encouraged to focus on mutual funds alone because it was appropriate for small-time investors. But with all the online brokerages, people can now purchase stocks for as little as $50. Although the immediate goal of having a diversified portfolio might be difficult, over time, a diversified basket of stock holdings can easily be achieved.

The dilemma comes in the form of not having the luxury of diversification at the initial outset, as provided with the beauty of mutual funds. The final choice is in the hands of the investor, although my professional opinion would be to start with a basket of mutual funds and then create a portfolio of stocks on the side.

creating your portfolio

Before you can begin creating your portfolio, you must first understand what you should be looking for, as well as what a portfolio is.

A portfolio is a collection of stocks, bonds and any other form of investments. Depending on the type of portfolio you want to create, each one holds different weight. No matter how simple your present portfolio is, it is never too late to create one that tailors to your needs.

Beginners are advised to start with the purchase of mutual funds, which in itself is a collection of stocks, bonds, cash, and other assets. Mutual funds will typically show their top ten investment holdings and also publicize the philosophy of the fund as well. The main purpose of this is so that the investor can easily relate to the main objective of the fund.

From this point, an investor might consider investing in stocks that they are comfortable with.